September 21, 2021
Most often, tenants are the ones paying for the right to live in your rental property. But there are some instances when a property owner may need to compensate a tenant. When certain issues arise, you may find yourself in the unusual situation of paying your tenants, instead of the other way around. To be as prepared as possible, it is imperative to know what type of circumstances could result in tenant compensation and when and where you should offer it.
The question of tenant compensation derives almost entirely from landlord/tenant laws. As a property owner, it is your responsibility to ensure that your rental house is in a habitable condition. Typically, this means that your rental home is clean and free of pests. It also means that your roof keeps the house dry and that the appliances and other elements work the way they are designed to.
One of the most common reasons a property owner would need to compensate a tenant is because of repairs. In certain situations, a property owner may not be able to make necessary repairs promptly. Regardless if you are out of town or otherwise unavailable, if something breaks and causes your tenants to lose the quiet enjoyment of the rental house, you need to fix it. If you can’t, your tenant may go ahead and have the repairs done within the confines of state law. It’s best if the tenant has your permission first, but even if they don’t, chances are that you’ll need to reimburse your tenant for the cost of repairs if they follow the state requirements.
Most of the time, compensation comes up in disagreements about the condition and functionality of appliances. Failing to take responsibility for broken appliances is one of the most common reasons a property owner winds up getting sued by their tenants. Part of the reason for this is because the situation is more complex than it at first appears. Landlords sometimes argue that a broken dishwasher, while a hassle, does not make the entire property uninhabitable. At the same time, a broken oven or refrigerator is recognized to be an even larger issue and tenants may argue that the home is uninhabitable. If you have provided appliances with the rental house, one of them breaks down, and you can’t replace it right away, your tenant may be justified in repairing the machine and deducting the amount from the rent; as prescribed in your state’s landlord/tenant law. This is especially true if your lease documents assign responsibility for the appliances to you as the property owner.
While the most common, these are not the only reasons you may need to compensate a tenant. However, if you do find yourself in a situation where payment is required, it is important to document everything carefully and then issue the funds promptly. If you are pro-rating a rent payment, be sure to record it and to notify your tenant in writing. If you need to send payment to your tenant directly, use a method that offers a paper trail, such as a business check.
While landlord/tenant laws do vary from place to place, staying on top of tenant compensation is an important part of maintaining good tenant relations. As a property owner, you’ll need a comprehensive understanding of the landlord/tenant laws that govern compensation to ensure that you are in full compliance. Texas Homes Realty and Management can help you prepare a lease to cover these issues or even manage your property entirely properly. Contact us today to get started.